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Hogan Vetoes Maryland Digital Ad Tax

The Association of National Advertisers is celebrating the veto Thursday (May 7) of a Maryland digital ad tax bill that passed the legislature but fell under the weight of the governor's veto and the downward economic pressure of a pandemic. 

ANA had pushed back hard on the legislation. 

The Maryland almost-law (HB 732) would have been a gross revenues tax on "certain" digital ad services, and would have presumed that digital ads are provided in the state under "certain" circumstances and require "certain" persons with "certain" annual gross revenues from digital ad services to pay the tax.  

But Republican Governor Larry Hogan said the economic fallout from the COVID-19 pandemic means it would be "unconscionable" to approve any new "tax hike" legislation. The bill would have boosted the state's coffers, which have also been hit hard by the virus.  

He said the bill was misguided and would raise taxes at a time when many are out of work and struggling.  

Ad sales and services taxes are periodically introduced as states look for new revenue and ANA is always on the lookout to spread the alarm when that happens, but ANA said this would have been the first one that had passed a legislature. 

The Maryland bill would have levied a 10% tax on “annual gross revenues of a person derived from digital advertising services in the state.” The tax would have adjusted according to a company’s global annual gross revenue and could have applied to a lot of companies. The tax would also have extended to companies "that reasonably expect the person’s annual gross revenues derived from 10 digital advertising services to exceed a certain amount to complete." 

"The veto of this counterproductive proposal is an important victory for ANA and our members," said ANA. "It relieves small and large businesses of a major burden on their efforts to market their products and services, which in turn helps protect the almost 400,000 Marylanders whose jobs are supported by the sale of products and services generated by advertising – nearly 15 percent of the 2.6 million jobs in the state."